Flexibility to respond to opportunity

Pala’s flexible investment mandate allows capital to be quickly deployed in areas that maximize value - often where others can’t.

Responding to the absence of investment opportunities in cobalt, owing to its role as a byproduct metal, Pala successfully built a portfolio of physical metal and royalties that was used to seed Cobalt 27.

Cobalt 27 is listed on the TSX-V providing the broader investment community with the only investment option of scale to get exposure to the cobalt investment theme.

Creating a publicly traded cobalt equity provided Pala with the liquidity required to manage and diversify its investment exposure.

Pala is a supportive shareholder, lending its in depth knowledge of the cobalt market and in-house capabilities to enable Cobalt 27 to execute on its phase II business plan of undertaking cobalt streaming transactions.

Cobalt 27 is traded on the TSX-V and offers investors the only pure play way to gain exposure to the cobalt market

History

Pala acquired a 30% stake in Sierra Rutile (“SRL”), the Sierra Leonean mineral sands producer, in September 2010 and subsequently increased its holding to over 50%.

When Pala first invested, SRL had suffered a series of setbacks:

Its share price had been languishing near all-time lows for an extended period.

The company was involved in a dispute with the Government of Sierra Leone regarding an outstanding government loan.

Its assets had been chronically neglected of investment and maintenance, and the company was loss-making.

"Pala has been the driving force behind the success of Sierra Rutile. Upon its initial investment, Pala was quick to understand the value opportunity, and was hugely supportive in the development of our strategic plan, the institutionalization of change, and the optimization of business processes and controls. As a direct result of our partnership with Pala, we have successfully turned-around the business, and with a number of growth projects executed and under development, we have a strong future.”

John Sisay, Chief Executive Officer, Sierra Rutile

Value creation through partnership with Pala

Pala, in collaboration with Sierra Rutile’s employees, shareholders and other stakeholders, was successful in implementing the following

Strategic business plans – Execution of a strategic business plan, repositioning SRL operations from a capital-intensive dredging operation, to a more flexible dry mining business focused on cash generation across the commodity cycle.

Production growth – SRL’s rutile production increased from 68,000 tpain 2010 to a record run-rate production of 172,000 tpain Q3 2016, making SRL the world’s largest producer of natural rutile.

Stakeholder relations – Re-establishment of a positive and cooperative relationship with the Government of Sierra Leone, including repayment of its loan, and enhanced focus on community, including environmental, infrastructure, educational and healthcare projects.

Successful exit to market leader, IlukaResources

In December 2016, Pala completed the sale of its 53% interest in SRL to a leader in the mineral sands industry, IlukaResources.

The transaction valued SRL at £215 million.

During its partnership with Pala, Sierra Rutile was transformed from a loss-making company to a business that has generated EBITDA in excess of US$100 million p.a., and became the world’s largest producer of natural rutile

"Pala was much more than an investor in our company; they acted as an advisor with deep mining expertise and connections. They provided us with continuous insights, trends and research about the global mining market, introduced us to potential customers and provided guidance on addressing customer challenges. Pala promotes collaboration across their portfolio companies which leadstothe sharing of ideas to solve customer problems.”

Rick Moignard, former President and Chief Executive Officer, GemcomSoftware International Inc.

Partnering in a consortium

Pala worked closely with the consortium and Gemcom’s management team to further develop the company’s dominant global position in the mining software sector.

Strategic development – With its partners, Pala assisted Gemcom in the development of its corporate strategy, including targeting growth in new commodities and geographical markets, and capitalizing on industry trends.

Technological investment – The consortium promoted focused investment in software R&D and technology to enable the successful penetration of new markets.

Globalization – The consortium guided Gemcom through the globalization of its operations through substantial investment in sales and operational infrastructure in Asia, Africa, and South America.

Leverage of network – Pala leveraged its network and portfolio to support the expansion of Gemcom’s service offering.

M&A support – The consortium supported global M&A, including the successful acquisition and integration of TeamTech Australia.

Management strengthening – The consortium augmented Gemcom’s senior management team by assisting with the recruitment of a new CFO, and various VPs to support the company’s international growth.

Gemcomwas sold to DassaultSystems for US$360 million, realizing a 3x return on invested capital.

"Pala has been an active investor since its ownership of Norcast. Pala brought industry knowledge, professional management and advanced business processes, which enabled Norcastto build and execute an effective strategic plan. Pala’s expertise and insight helped Norcastdevelop into an undisputed industry leader. There has been great success due to the strong relationship with Pala.”

Exit planning – Pala worked closely with management and its partners to plan for and maximize value upon exit, for the benefit of all stakeholders.

Alternative exit routes evaluated – Pala considered all alternatives for the exit, including a trade sale, re-IPO and other partial exits, ultimately opting for a competitive auction.

Maximization of value for both Pala and its partners – The original owners of Swanmetaccessed an exit with Pala that would not have otherwise been possible, returning an additional 53% on their investment.

Pala sold Norcastfor $190 million, on an original investment of $74 million.

Vietnamese export tariffs on nickel concentrate had been increased from 5% to 20%.

The Vietnamese government had threatened to retract AMR’s licenses.

A typhoon had hit the mine site.

Following a long period of neglect, the local community had disengaged with the project.

AMR was unable to raise funds and the development of Ban Phuchad failed

"Pala’s investment provided Asian Mineral Resources with access to turnaround skills and operational expertize that proved invaluable in bringing the Ban Phucproject into operation. Having achieved commercial production at Ban Phuc, Pala continues to bring important support as we focus on growth, including the depth of experience of Pala’s technical team and the strategic and commercial support provided by Pala in pursing our corporate objectives. Pala's strategic vision and industry know-how continue to benefit Asian Mineral Resources as we grow into the future.”

Evan Spencer, Chief Executive Officer, Asian Mineral Resources

Value creation through partnership with Pala

Restart of construction and production – Pala’s financial support enabled full-scale construction. Mine production commenced in June 2013.

Stakeholder relations – AMR has re-engaged with the national and provincial governments and the local project partner. Pala has also driven various CSR initiatives, from local procurement to education and technical training to micro-finance partnerships. The mine is now fully supported by all key stakeholders, from government to the local community.

The production of nickel matte (instead of concentrate) allowed AMR to renegotiate export tariffs from 20% to 5%, as well as capture downstream value.

Board and management strengthening – Individuals selected for their governmental relations and operational turnaround experience were appointed to the board.

Evan Spencer was added to the team as CEO, bringing expertise in mine construction.

In addition, Pala has provided considerable internal resources to supplement the team.

Financial support – Pala has backstopped equity financing and has bought out disinterested shareholders.

M&A – Pala provided strategic transaction support to AMR throughout the merger with Kasbah Resources.

Engagement with local community – Pala has driven various CSR initiatives, from local procurement to education and technical training to micro-finance partnerships. The community has now officially committed its support to the development of Ban Phuc.

Since partnering with Pala, AMR has progressed from being an overlooked development asset to achieving full-scale production. The company is now evaluating expansion options.

Fully-funding the Lance project into production with Resource Capital, Blackrock and JP Morgan

Long-term shareholder – Pala first invested in Peninsula Energy in 2010 by way of A$22 million in equity investment and a A$100 million equity facility.

Pala has remained supportive and has participated in follow-up financings.

Supportive partner – Pala joined the board and has supported management in the continued development of its uranium projects in the United States and South Africa, as well as with various matters related to strategy, corporate finance and governance.

Funding the project into production – Pala played a crucial role in Peninsula’s A$69.4 million financing in December 2014, including:

Participation in the A$34.8 million underwritten equity financing with Resource Capital, Blackrock and JP Morgan.

Provision of a A$17.8 million stand-by debt facility together with Resource Capital.

Pala actively looks for opportunities to partner with other specialist mining investors.

Supporting an emerging platform for phosphate production

Strategic investor in a pipeline of phosphate assets – In March 2017, Pala invested in Itafosby way of a C$13 million equity investment to support the recommissioning of the Itafos-Arraiasoperations and strategic initiatives around Itafos’ portfolio of global phosphate assets.

The Itafos-Arraiasoperations in central Brazil comprise of a phosphate mine, processing facilities, and related infrastructure.

Itafos’ asset portfolio includes a near-term development opportunities through its holdings in GB Minerals and StonegateAgricom, as well as a pipeline of projects in Brazil and Peru.

Supportive partner – Pala has provided strategic and operational assistance to management, including the following:

Support to management in recommissioning, including technical oversight and implementation of management systems.

Support in strategic and corporate development, including growth opportunities and governance.

Integrated Itafos-Arraiasoperations – Itafos

Pala actively partners with like-minded investors in building platforms for growth in strategic markets.